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Smart thinking

As October 8 approaches, there are strong suggestions around the market that there are just not enough advisers to meet the demand from employers to set up schemes before they face the prospect of a potentially stinging Opra fine.

In the rush to establish stakeholder schemes before the deadline, it is important that IFAs are not storing up problems for themselves by choosing providers who are not able to cope with the admin strain that writing vast numbers of new schemes puts on them. There have been stories app-earing in the trade press of providers struggling under the weight of business being off-ered to them.

The closer we get to the deadline, the more important it must become to choose prov-iders which cannot just cope with new business but get it quickly and efficiently on to their books, creating a minimum of hassle for the IFA and their administrators.

For the past couple of years, Scottish Equitable has been running its Smart Scheme service to help IFAs write new group business quickly and easily. One of the most important elements of this service is a dedicated team which will take files in virtually any format from the employer&#39s payroll records and convert it into data that can be used to establish new group schemes.

Early last year, the company was writing over 90 per cent of its new group pension business using Smart Scheme. I understand that nearly 100 per cent of new group arrangements are now set up using this specialist resource.

Smart Scheme has now come to the web. This is not just another life office extranet that invites IFAs to take over part of the processing responsibility from the life office. This service is more about letting the IFA identify the progress of any scheme and access information on it.

When I met recently with ScotEq head of sales (group business) Jonathan Black and sales information manager Susan Stephen, they enthused about the extent to which the service was enabling them to accelerate new business processing.

Apparently, the time taken to process new schemes has been cut from four weeks to as little as a few hours. This means the company can notify employers of scheme numbers straight away so these can be included in the initial BACS messages sending the first contribution, which in turn enables the company to tie up payments with schemes quicker. This also speed up commission payments to IFAs.

Once the scheme has been set up on the company&#39s systems, IFAs are also able to use the service to download the now cleaned data back from the extranet to populate their own mailshots or download either premium schedules or all data on a scheme into a comma-separated value sch-eme.

Some back-office system providers, such as 1st Software and Link, are already able to give IFAs the facility to populate this back to the adviser&#39s own systems.

The new web-based Smart Scheme has also enabled the company to reduce the length of its key features documents from 13 pages to seven. The service is not able to fully pre-populate the member applications although I am told this should be available within a matter of weeks.

A quick quote facility allows ScotEq branches to create consolidated quotes for up to four situations on to a single screen. In the past, this was only possible if the branch ran a series of quotations and entered inf-ormation from the resultant key features documents onto a spreadsheet.

Although des-igned for branches, this facility can be accessed by IFAs if urgent information is needed out of office hours.

ScotEq also gave me a preview of its SmartPay service, to be launched in the autumn. This will allow employers to use payroll extracts to set up the exact amount of contributions they need to pay into a scheme on a month by month basis. With the advent of stake-holder, one of the major res-ponsibilities of an employer is to allow a payment of contributions by payroll deduction and to pass those contributions to the provider no later than the 19th of the month after the month in which the deduction is made.

Many employers will not have in place the other mechanisms necessary to make sure they comply with this key responsibility and, unless they have bought or updated their payroll software in the last year or so, it must be questionable if it will have built in capability to deal with stakeholder.

SmartPay will help the employer define exactly the correct level of payment to make, including any single premiums, additional regular premiums and contribution holidays, and then ask ScotEq&#39s system to take a payment from their account by the agreed means.

Receiving a payment that, by definition, must tie up with the details submitted to the pension provider using the same mechanism should drastically reduce the likelihood of a payment not matching with the amount sent, as can so often be the case when paperbased schedules are sent with the remittance being triggered separately. Such situations can frequently cause frustration between employer and provider and waste time for all involved.

The service will also make it easy to identify new employees who may not yet be contributing so the adviser can target them as joiners.

Overall, ScotEq seems to be doing a great deal to automate processes and reduce costs without seeking to pass the burden of such changes on to the IFA. The ability to set up and administer new schemes quickly must put them in a strong position to be chosen for the potentially vast number of last-minute stakeholder arrangements.

In a 1 per cent world, where price and product features are increasingly neutral, services and support technology will have an ever increasing role in deciding which pro-viders truly represent the best option for employers and emp-loyees. It is good to see that this point has been so clearly recognised and acted upon.

Ian McKenna is a consultant and director of the Financial Technology Research Centre which works for a wide range of industry organisations, life offices and technology companies, including Microsoft, Assuresoft and The Exchange.

He can be contacted by email at

Tel: 020 7935-2599

Fax: 020 7935-2995


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